Welcome to the NCERT Solutions for Class 12 Micro Economics. This page offers chapter-wise solutions designed to help students grasp key concepts easily. With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.
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Chapter 1 Introduction to Micro Economics
Economy refers to the nature and level of economics activities in an area. It shows how the people of the concerned area earn their living. (a) market economies are those economies, in which economic activities are left to the free play of the market forces. (b) centrally planned economies are those economies where the course of economic activities is dictated or decided by some central authority or by the government. (c) Mixed economies share the characteristics of both market and centrally planned economies. The basic economic activities of life are: production, exchange and consumption of goods and services are among the basic economic activities of life. Every society must decide on how to use its scarce resources. Hence, the allocation of scarce resources and distribution of the final goods and services are the final goods and services are the central problems of any economy. In a centrally planned economy, the government or the central authority plans all the important decisions regarding production, exchange and consumption of goods and services are made by the government. It is the value of a factor in its next best alternative use. It shows different combinations of two goods, which can be produced with given resources and technology.
- Chapter 2 Theory of Consumer Behaviour
- Chapter 3 Production and Costs
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Chapter 4 The Theory of the Firm under Perfect Competition
A market in which we find perfect competition between a large number of buyers and a large number of sellers of a homogeneous product and uniform price is called a perfect competition market. A firm produces and sells a certain amount of a good. It is the difference between revenue and cost. Break even for a firm occurs when it is able to cover its all costs of production. It occurs when a firm is just able to cover its variable costs increasing the loss of fixed cost of production. A producer is said to be in equilibrium when he maximizes his profit or minimizes his losses. It means the amount of a commodity that firms are able and willing to offer for sale in the market in a given period of time and at a given price. It means the amount of a commodity that firms are able and willing to offer for sale in the market in a given period of time and at a given price. Tabular statements of relationship between price and supply of commodities is called supply schedule. Graphical presentation of relationship between price and supply of a commodity is called supply curve. The market supply curve for a commodity shows the relationship between the price of a given commodity and quantity sellers are inclined to sell. It is a measure of the degree of responsiveness of quantity supplied to changes in the commodity own prices.
- Chapter 5 Market Equilibrium
- Chapter 6 Non-competitive Markets
Popular Questions of Class 12 Micro Economics
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The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm’s supply curve is 0.5. Find the initial and final output levels of the firm.
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A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?
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How does the imposition of a unit tax affect the supply curve of a firm?
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What is the supply curve of a firm in the long run?
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Distinguish between a centrally planned economy and a market economy.
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A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4. - Q:-
How will a change in the price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.
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Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
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What is the total product of input?
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Suppose there are 20 consumers for a good and they have identical demand functions:
d(p)=10–3pd(p)=10–3p for any price less than or equal to 103103 and d1(p)=0d1(p)=0 at any price greater than 103.
Recently Viewed Questions of Class 12 Micro Economics
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What do the short-run marginal cost, average variable cost and short-run average cost curves look like?
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What conditions must hold if a profit-maximising firm produces positive output in a competitive market?
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Explain market equilibrium.
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What is meant by prices being rigid? How can oligopoly behavior lead to such an outcome?
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If the monopolist firm of Exercise 3 was a public sector firm. The government set a rule for its manager to accept the government fixed price as given (i.e. to be a price taker and therefore behave as a firm in a perfectly competitive market). And the government has decided to set the price so that demand and supply in the market are equal. What would be the equilibrium price, quantity and profit in this case?
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What does the average fixed cost curve look like? Why does it look so?
- Q:-
A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4. - Q:-
Why is the total revenue curve of a price-taking firm an upward-sloping straight line? Why does the curve pass through the origin?
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Briefly explain the concept of the cost function.
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What do you mean by substitutes? Give examples of two goods which are substitutes of each other.